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Regulators Close Four Banks and One Credit Union

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Regulators closed four banks today. Two were in Georgia, and two were in California. That brings the total number of 2011 bank failures to 22. All four banks were small. The largest, Habersham Bank in Georgia, had 8 branches and total assets of $387.6 million.

The FDIC arranged for all four banks to be acquired by other banks. All deposits were assumed by these acquiring banks except for certain brokered deposits.

The FDIC had its usually note on interest rates in the Q&As for each closed bank:

Current rates will be reviewed by the new bank and may be lowered; however, you may withdraw funds from any transferred account without early withdrawal penalty until you renew your Certificate of Deposit.

I couldn't find any additional information on CD interest rate changes at the acquiring banks' websites. Sometimes, the acquiring banks will include their own Q&As that describe their plans for rates on CDs assumed from the failed banks.

In addition to the four bank failures, there was one credit union liquidation this week. This brings the number of credit union liquidations this year to 2. Also, the NCUA placed one credit union into conservatorship. That's the first for the year. In a conservatorship, the NCUA assumes control over the credit union. According to the NCUA's press release: "NCUA’s goal is to continue credit union service to the members and ensure safe and sound credit union operations."

All of the bank and credit union health ratings were inline with institutions that were near failure except for the credit union placed into conservatorship. We and Bankrate had fairly high ratings for this credit union. BauerFinancial's rating was only 1 star. This credit union was very small with only $2.2 million in assets. Tiny credit unions appear more susceptible to conservatorship or liquidation even though they have solid financial numbers.

The FDIC should be releasing its Q4 report of the banking industry next week. This will include December 31st financial data for the banks. This is the data that we and others use to formulate the ratings. We should have our ratings updated within a few days of the FDIC's release.

Below is a summary of this week's bank and credit union failures:

19th Bank Failure of 2011 (5th in Georgia)

  • FDIC Press Release
  • Closed Bank: Habersham Bank, Clarkesville, GA
  • Size: 8 branches, $387.6 million in assets, $339.9 million in deposits
  • Acquiring Bank: SCBT National Association, Orangeburg, SC
  • Possible Uninsured Deposits: All deposit accounts, including brokered deposits, have been assumed by SCBT, N.A
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $90.3 million
  • Enforcement Action: FDIC 6/26/09 C&D Order (8-K)
  • Financial Ratings: 1 star at Bankrate.com, 0 stars at BauerFinancial, 0 out of 5 with a Texas Ratio of 661.08% at DepositAccounts.com

20th Bank Failure of 2011 (6th in Georgia)

  • FDIC Press Release
  • Closed Bank: Citizens Bank of Effingham, Springfield, GA
  • Size: 4 branches, $214.3 million in assets, $206.5 million in deposits
  • Acquiring Bank: HeritageBank of the South, Albany, GA
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by HeritageBank of the South
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $59.4 million
  • Enforcement Action: FDIC 5/4/10 Consent Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 367.54% at DepositAccounts.com

21st Bank Failure of 2011 (2nd in California)

  • FDIC Press Release
  • Closed Bank: Charter Oak Bank, Napa, CA
  • Size: 2 branches, $120.8 million in assets, $105.3 million in deposits
  • Acquiring Bank: Bank of Marin, Novato, CA
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits have been assumed by Bank of Marin
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $21.8 million
  • Enforcement Action: FDIC 9/2/10 Consent Order, FDIC 9/30/10 PCA
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 116.15% at DepositAccounts.com

22nd Bank Failure of 2011 (3rd in California)

  • FDIC Press Release
  • Closed Bank: San Luis Trust Bank, FSB, San Luis Obispo, CA
  • Size: 1 branch, $332.6 million in assets, $272.2 million in deposits
  • Acquiring Bank: First California Bank, Westlake Village, CA
  • Possible Uninsured Deposits: All deposit accounts, excluding the Cede & Co. deposits, have been assumed by First California Bank
  • Rate Changes: Current rates will be reviewed by the new bank and may be lowered
  • Estimated Cost to Deposit Insurance Fund: $96.1 million
  • Enforcement Action: OTS 11/2/09 C&D Order
  • Financial Ratings: 1 star (lowest) at Bankrate.com, 0 star at BauerFinancial, 1 out of 5 with a Texas Ratio of 142.46% at DepositAccounts.com

2nd Credit Union Liquidation of 2011

  • NCUA Press Release
  • Liquidated CU: Family First Federal Credit Union of Orem, Utah
  • Size: $119 million in assets and served 18,000 members
  • Acquiring CU: Security Service Federal Credit Union, San Antonio, Texas
  • Financial Ratings: 0 out of 5 with at DepositAccounts.com, 1 star at Bankrate.com, ? star at BauerFinancial

1st Credit Union Conservatorship of 2011

  • NCUA Press Release
  • CU Placed into NCUA Conservatorship: Greensburg Community Federal Credit Union of Greensburg, Pennsylvania
  • Size: $2.2 million in assets and served 983 members
  • Financial Ratings: 4 out of 5 with a Texas Ratio of 0.94% at DepositAccounts.com, 4 stars at Bankrate.com, 1 star at BauerFinancial

The above ratings are based on September 2010 data.

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